Europe's defence spending surges 17 percent but capability gaps remain

European NATO members increased defence spending by 17 percent in real terms last year to $693 billion, leading a global rise of 9.4 percent to $2.7 trillion, according to the Stockholm International Peace Research Institute. The figures, released on Monday, mark the highest level of military expenditure on the continent since the fall of communism. Russia's war in Ukraine was the principal driver, but the data also reveals a deeper shift: Europe is preparing for a future in which American security guarantees can no longer be taken for granted.

The numbers behind the surge

The protagonists of the war in Ukraine still bear the heaviest burden. Russia raised spending by 38 percent to $149 billion, equivalent to more than 7 percent of its economic output. Ukraine devoted its entire tax revenue of $64.7 billion to defence, spending 34 percent of GDP, the highest share of any country. But the most striking changes occurred in European capitals that have lived for decades under the American security umbrella. Every EU member state except Malta raised its defence budget in 2024, reflecting a threat perception that has become continent-wide rather than confined to the eastern flank.

Germany led the increase with a 28 percent jump, as the €100 billion Sondervermögen announced by Chancellor Olaf Scholz in 2022 finally began to flow into contracts. The German parliament last month authorised up to €1 trillion for infrastructure and defence over the coming decade, a constitutional change that embeds higher spending beyond any single government. France, Poland and the Baltic states also recorded double-digit growth. The EU's Rearm Europe package, adopted in March, relaxed deficit rules to allow an additional €650 billion in off-budget defence expenditure, alongside a €150 billion fund to boost European defence industrial production.

Why the money is not yet capability

The raw figures conceal a more difficult reality. Major military capability takes years to develop, as Lukas Milevski of Leiden University emphasised. Germany promised Lithuania a brigade in 2022; its barracks are built in southwest Lithuania, but the unit will not be manned, trained, equipped and operational until the end of 2027. That five-year gap between political decision and deployable force is typical. Procurement cycles for complex systems, air defence, armoured vehicles, long-range strike, stretch across a decade. The Rearm Europe exemptions expire well before many of those programmes reach their peak spending years, creating a fiscal cliff that could stall modernisation just as it accelerates.

Milevski also noted that defence policy requires stable, multi-year funding commitments. The current framework provides a one-off surge but does not solve the structural problem: European governments still budget annually, while weapons programmes demand decade-long horizons. Without a mechanism to lock in funding across electoral cycles, the continent risks a repeat of the post-2014 experience, when spending pledges made after Crimea's annexation were quietly diluted as political attention shifted.

The redundancy problem

Europe's defence industrial landscape remains fragmented. Different member states compete to have their tank, artillery system or rocket launcher adopted as the EU standard, each backed by national industrial policy and political patronage. The result is a proliferation of platforms that cannot interoperate seamlessly and supply chains that lack the scale to compete with American or Chinese counterparts. The United States spends $997 billion annually, a budget often criticised for pork-barrel procurement, but at least it fields a single standard for most major systems. Europe spends two-thirds as much and fields dozens.

Seth Krummrich, a retired US colonel now at security consultancy Global Guardian, sees a significant opportunity for the EU to leap forward technologically rather than preserve legacy platforms. He points to Ukraine as a dirt laboratory that has revealed a new evolution in warfare, especially regarding drones and unmanned vehicles. But seizing that opportunity requires member states to cede industrial sovereignty to a genuinely European procurement authority, a political step none has yet been willing to take.

Strategic autonomy versus alliance cohesion

The concept of strategic autonomy now drives European defence resolve, but it carries risks. Hugo Bromley of Cambridge University's Centre for Geopolitics argues that the United States and Europe should not be decoupling but working together to provide specific capabilities in both Europe and the Indo-Pacific. The scarce assets America needs, high-end airlift, long-range missiles, advanced surveillance, are precisely the capabilities that European nation states wish most to keep under national control. Bromley identifies East Asia, Germany, France, Britain and the Commonwealth countries as natural partners for developing those high-end systems, but this internationalist approach is currently out of favour on the continent.

The tension is structural. NATO's defence planning process assumes burden-sharing, not duplication. If Europe builds its own parallel command structures, logistics networks and procurement agencies, the alliance becomes less efficient, not more resilient. Yet the political impulse toward autonomy is strengthened by the perception, reinforced during the Biden administration and likely to intensify under any future US president, that American attention is pivoting permanently toward the Pacific. European capitals are hedging against abandonment, not planning for partnership.

The Ukrainian front tells its own story

Meanwhile, the war that triggered the spending surge has settled into a grinding war of attrition. Krummrich describes the operational map as largely stagnant, fought by conscripts on both sides with negligible front-line movement. The highly trained troops and great campaign plans of 2022 are gone, replaced by what he calls a meat grinder. In his view, high spending will not turn the war decisively for either side; it will only result in further death. That assessment underscores a uncomfortable truth: money buys equipment, but it cannot quickly replace the human capital, experienced officers, trained NCOs, cohesive units, that determines battlefield outcomes.

Ukraine's experience also illustrates the limits of industrial surge capacity. Despite massive Western assistance, Ukrainian artillery fire rates remain well below Russian levels because neither European nor American production lines can be expanded quickly enough. The same bottlenecks, skilled labour, specialised machine tools, secure supply chains for rare materials, will constrain European rearmament. The €150 billion EU fund aims to address this, but building new production lines takes three to five years; qualifying them for NATO standards takes longer.

What the numbers do not show

SIPRI's data captures budgetary effort, not strategic output. A billion euros spent on personnel costs or legacy platform maintenance counts the same as a billion spent on next-generation air defence. The 17 percent increase looks impressive, but much of it simply restores readiness degraded by three decades of underinvestment. Germany's Bundeswehr, for example, still reports significant shortfalls in ammunition, spare parts and deployable brigades despite the Sondervermögen. The gap between allocated funds and operational reality remains wide across the continent.

There is also the question of opportunity cost. The €650 billion enabled by Rearm Europe represents fiscal space that could have been used for energy transition, digital infrastructure, or social investment. European governments have chosen defence, but the choice was made in an atmosphere of urgency rather than through a debated grand strategy. The risk is that spending becomes a substitute for strategy, a way to signal resolve without making the hard political choices about force structure, industrial consolidation, and alliance roles that would actually produce security.